Black and White Technical Report: The Week Beginning 12/04/2021

Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets

Seasonally the month of April remains one of the best trading months of the year for the “long side” traders.

Markets continue the march higher with solid gains in Australian and US Indices along with a recovery in precious metals from recent lows.

The Relative Strength Indicator 14 (referred to on most of the charts)  is a strong indicator of underlying market momentum and resilience when viewed on the Weekly chart, at present most readings are within a normal range showing strong positive price momentum.

A positive momentum change is showing in both Gold and Silver, traders should monitor these levels for a full-on breakout to higher prices.

 

 XJO WEEKLY
Price structure:
Last week the breakout arrived with a strong open to close price range above the consolidation of the past 19 weeks.

The 7130-resistance level is now in play.

The chart has the Bollinger Band overlay, a measure of “relative” price volatility, currently showing a narrowing Bollinger Band “squeeze” indicating volatility was relatively low. Last week’s range is outside of the band, this type of early breakout often leads to a continuation movement as “relative” price volatility expands. 

It is important to acknowledge where this analysis would be incorrect, in this case a close below the key level of 6737, would signal a false breakout and a bearish move underway.


Indicator: Relative Strength
The RSI indicator has remained over the key 50 level, last week turned higher again, this is a good signal of improving price momentum. The potential divergence signal has been negated, so the indicator remains a bullish signal for further positive price momentum.

The RSI should be monitored for a potential move below the key level of 50 to show a shift to bearish momentum.

Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets
Comments from last week: Although the XJO has been consolidating for the past nineteen weeks, the Index closed last Thursday at the high part of the range, setting up a bullish view for the coming shortened week.

The “tentative” trendline remains and will be monitored for a closing price below the line as an early signal of any further weakness.

The underlying primary trend remains UP.

 

XJO DAILY
Price structure:
Strong daily price ranges leading into Fridays inside period (IP). Follow through higher could be expected, the first signal would be a close above the current high of 7012.0. 

The intraday key reference for support is now the 7000 points level.

The daily trend has now resumed to UP, with last week’s larger price range days shown on Tuesday and Thursday the impulsive price movement should continue into early this week.

 

Indicator:  Relative Strength
With RSI making a new move above the key 50 and 70 level bodes well for further gains with a move above the 70 a signal of very strong price momentum. The RSI can remain above the key 70 level for many weeks and should be monitored for a Bearish divergence signal.

 

Indicator:  VOLUME
Overall volume has been increasing as price rallies, Last Friday’s inside period (IP) high was not outstanding leading into the weekend. Volumes can be seen declining on the price rally. Further price gains would need strong volumes to confirm broad market participation.

Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets
Comments from last week:  Early weakness last week has set a new higher low (HL) before meeting the longer term support level at 6655 points, with the Wednesday outside range testing the highs again.

Thursday’s inside range shows the market in balance, so an early move either way this coming week will give direction for the short term traders.


S&P 500 WEEKLY
Price structure:
The very strong price range of last week the third week of gains, may end with an exhaustion move this week.

Following 3 weeks of strong gains, some profit taking would be expected.

The recent Weekly highs of 3980 provides the immediate support level to hold should a profit taking retracement occur.

It important to note, the Primary Price trend remains UP and there are NO price reversal signals.

 

Indicator:  Relative Strength Indicator
The Bearish divergence has now failed as the RSI turns higher as price again sets a new closing high.

Overall, the RSI is currently reflecting stronger price momentum as the indicator moves higher to the 70 level, this is not a level of over brought, and only indicates very strong momentum.  (This type of momentum is often a precursor to profit taking.)

Should the RSI show a movement below the 50 level, this would signal strong bearish price momentum.

It should be acknowledged the RSI has also remained above the 50 level for the past 12 months.

Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets
Comments from last week: All of the US Indices put in strong gains last week. The S&P 500 shows a close at the high of the week and an all-time high. 

AS stronger fundamentals begin to show the underlying markets will hold and react higher. This is not a time to “guess” taking a short position, the underlying PRIMARY TREND remains UP, and this stage there are no reversal signals.

 

S&P 500 DAILY
Price structure:
The daily price chart can only be described as an extended move underway. Last Friday’s strong close should see some early follow through this week. 

Doing a count back there have been 10 days of relative price gains without a meaningful retracement. A quick study of the chart shows this is an extended move and often leads to some form of retracement or consolidation.

This could be expected later this week.

 

Indicator: Relative Strength
Relative Strength short term has turned sharply higher above the 70 level. The RSI should be monitored for a movement and continuing close above the 70 level.

As upward price momentum may be subject to some profit taking a sideways movement could be expected, this would now be monitored for a Bearish divergence signal.

Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets
Comments from last week:  The Daily chart of the S&P500 shows a short “retest” of the 3940 level followed by Thursday’s close at the all time high, the range of the day is the strongest for the shortened week.

This bodes well for further gains, should price weakness start to show the 3940 will be the first level to hold, a close below this level would set a short term bear signal.

USD Spot GOLD – DAILY
Price structure:
The upside target mentioned last week should remain the key resistance level in the coming week.

The daily chart shows a lower “shadow” on Friday’s bar, a sign of support following the recent price gains.

A breakout above $1764.30 would be a very bullish signal for Gold stocks and further gains in the underlying metal.

This daily Gold chart is on the verge of entering a Primary UP trend, the current “trend point” is marked, a close over this level would signal the UP trend in place. 

The smaller speculative stocks will remain news dependant.

Indicator:  Relative Strength
Relative Strength turns higher to cross the key “50” level. This is an early signal of changing momentum and should be monitored for a further close above the 50 level.

Look for a continued upturn in the RSI to confirm any potential price rally getting underway.

Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets

Comments from last week: A new Higher low (HL) was set last week, this is an important development in any turnaround story. The short term down trend line is broken and $1764 remains the upside target. 

The breakdown across the long term trendline was short lived (1 Day) and shows the buyers have entered the market.

Wednesday and Thursday are to very strong “low to high” days, and look to set the scene for higher prices.

AUD GOLD DAILY
Price structure:
The AUDUSD Gold price remains constructive for further gains, this will underpin advances in the Australian listed Gold producers gains of the past week and sets a strong signal of further gains in the Gold miners / producers.

Although the price chart has yet to show real strong price momentum change, the continuing consolidation along these levels offers strong evidence the base is building for a continued move higher. 

 

Indicator:  Relative Strength
With the RSI turning higher from below the key 30 level showing a changing momentum. 

This momentum indicator has continued a swing higher over the key 50 level in line with price gains to confirm a valid RSI buy signal.

Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets

Comments from last week: The current higher low (HL) is a very important development for the overall structure of “trend”.  A further close over the $2300 level would put the AUDUSD Gold price into a Primary up trend and remain very positive for local producers. Underlying Australian Gold producers, SLR, NCM, NST may see a strong bid in the coming week. This will require the underlying $USD Gold price to remain strong and the $AUD to remain steady to lower.


SILVER DAILY
Price structure:
Last week prices have moved higher over the short down trend line. The key resistance level of $26.00 remains.

Silver remains within the definition of a Primary Down trend. And it should be acknowledged the potential is for further declines. 

So what’s changed? the last “FO,LL” point is the third leg down and is a shorter overall range than the previous 2 legs down from February/ March, this has been followed by last week’s short trendline break, this may an early sign of changing momentum.

 

Indicator: Relative strength
Relative Strength has turned higher but remains below the 50 level, operating in line with the underlying advancing price movement. A good signal for further improvement in price momentum would be a move above the 50 level. 

Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets

Comments from last week: Last week Silver set a bullish fake out (FO) with an immediate reversal to confirm a Bullish pivot point. That said, Silver remains within a Daily down trend, the earlier 3 bar reversal failed to set the low with key resistance at $26.00 remaining. This will be the first go to level for this current price rally should a breakout of the short down trend line occur.


COPPER DAILY
Price structure:  Inventories under pressure.
The continuing consolidation above the $4.00 level remains a strong sign of trader support at this level.

Last week bar showing a higher shadow indicates buyers willing to take the price higher, but with no conviction as sellers lowered the price for the week.

The current “pennant” remains a continuation pattern for higher prices. 

The underlying fundamentals for remain extremely bullish for the coming 12 months with the potential for supply shortages. 

 

Indicator: Relative Strength
Relative Strength has moved just below the 70 level. 

An early BEARISH divergence signal has continued to develop. Further confirmation will shown as a move below the “70” level and below the internal low set during February. The highlighted level in red.

It should be remembered the RSI can track above the 50 -70 level for many weeks at a time and currently remains a signal of very strong price momentum.

Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets

Comments from last week:  Persistent consolidation above the key $4.00 level remains a very bullish signal for further gains. However, traders should aware the closing price is lowest for the past 5 weeks. A breakdown below the $4.00 level would bring further selling in the short term as holders protect profits.

 

AUSTRALIAN VOLATILITY INDEX
Forward price volatility has remained low last week, this is a good signal for further gains in the Equities market as the cost of “insurance” via PUT Options has declined.

A continuing close below the “13” level would be ideal for the bullish view to remain in place.

The XVI is the difference of 1-month forward pricing of ETO Options against current month.

As markets anticipate events, the forward priced option volatility changes, hence as forward price changes, this “skew” in pricing is measured in this XVI.

The XVI value works as an inverse observation to the underlying market.   

Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets

Comments from last week: Volatility continues to decline, last week closing reading of 11.9 is a bullish sign for further gains in the equities market for the coming week.

Bad news is being discounted as markets begin an accumulation phase.

 

USD DOLLAR INDEX
Price structure:
The 2nd Bullish flag continues to develop, this is not a good signal to remain bullish on price as this current “grind” lower could simply fail to breakout higher. The 91.66 level remains the target for further price weakness within this PRIMARY UP TREND.

 

Indicator:  Relative Strength
While the RSI has made a sharp recovery above the 50 level and moved over the 70 level only to decline below the 50 level again. Traders will look for an RSI to remain above the 50 level to confirm a more significant momentum move higher is underway, while this remains highly probable, the current development has turned bearish. 

Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets

Comments from last week:  The USD Index remains within a very strong daily UP trend, with a potential 2nd Bullish flag developing, markets would be cognisant of a breakout higher in the offering. The next resistance levels around the 94 – 95 area will offer some insight into the overall bullishness of this Index. Current price targets from the 2nd Bullish flag are set around 96 – 97.

 

WTI CRUDE OIL
Price structure:  This commodity is news driven by supply -demand.
The “tentative” trendline for last week has broken as WTI develops a Bullish flag continuation pattern. 

The primary trend remains UP for Oil, but it should be noted the current price structure is sitting with in the large consolidation zone set back in 2018 and 2019.

$75 .20 remains the upside target of WTI in the coming weeks.

Indicator: Relative Strength
RSI turning higher over the 50 level and has now moved below the 70 level, momentum remains positive until a move below the key 50 level. 

The indicator is “rolling” lower in line with current price consolidation closing towards the low of the week. As the indicator moved over 70 and has now dipped below 70, this should also be monitored for a potential bearish divergence signal in the coming weeks.

Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets

Comments from last week The new “tentative” trend line is in place, last week WTI attempted to set a new low, but again found buyers to close towards the high of the week, BUT BELOW THE $61.80 level.

As the current structure still remains a bullish flag, a breakout higher could be expected.

$61.80 and $66.00 will remain the key levels of resistance in the coming days.

  • Black and White Technical Report: The Week Beginning 12/04/2021, FP Markets
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